Savings.

The Wisest Course

Plan Years Ahead To Cover Your Child's College Costs

Our daughter, Veronica, got her undergraduate degree in English from the University of Florida in 1994. And were Georgina and I glad.

Not just that Veronica had a college degree, but that we could stop fretting about spiraling college costs. (Or at least until a grandchild arrives.)

In the past few weeks, bad news has rained on parents--and students--worried that college costs are running out of control.

The College Board said last month that tuition and fees rose by 5 percent this fall, again higher than the 3 percent U.S. inflation rate. Tuition and fees at four-year public universities were up to an average $2,966 a year for state residents and $4,738 for out-of-state students. At private universities, the number went up to $12,823.

That's just part of the story--and the cost. When housing and other living expenses are added up, the average four-year cost at a public university is more than $44,000, according to the College Board, and almost $94,000 at a private school.

If you worry that's a lot of money, you've got plenty of company. Nearly 60 percent of U.S. voters polled by the Washington Post said college costs are putting higher education out of the reach of most Americans. Anxiety over this issue outranked every other domestic concern, including fear of crime and the health of the economy.

A survey by Fidelity Investments, the nation's largest mutual fund group, found that most parents who plan to send their children to college are worried they won't have enough money. At the same time, most underestimate how much money they will need for college, invest too conservatively or rely too much on a shrinking supply of scholarships and grants.

Is there a way out?

Admittedly, things have changed from the time Veronica got her undergraduate degree--and certainly from the time Georgina and I went to college. But the things we did are still quite valid, in fact more so in the face of rising costs.

First off--and I know this sounds almost sacriligeous--you do not owe your children a college education. Not if it means not taking care of your own basic needs, such as a secure retirement. Or do you want to become a burden to your children later on?

We paid for Veronica's college because we could afford to, and got enormous satisfaction from it. But we also set limits.

Of course, we started saving early, almost as soon as she was born. We invested more aggressively at first, when we had more time to take risks, then switched to more conservative investments as Veronica began high school. We always tracked college costs, and early in her senior year we got an estimate from the University of Florida as to how much it would cost for four years of undergraduate work.

It came out to about $30,000 for everything, including living expenses, trips home and a little bonus to account for inflation. We promised to take a fresh look at the numbers at the end of every semester. They were right and didn't need changing.

And that's how much we paid, about $7,500 a year. If Veronica wanted more, she could get a job. If she could manage for less, the difference was hers to keep. At the end, it came out even.

This way, planning for college became a family affair. Veronica knew there was a limit we would not exceed--the cost of a four-year education at a quality state school.

And we were very pleased to give Veronica an opportunity Georgina and I never had, to go to college without needing to work.

It boils down to this: If the cost of college is more than you can afford, discuss the situation frankly with your son or daughter and agree on how much he or she will be expected to contribute. Many of the modestly priced public schools and universities say students pay about 35 percent of their own cost.

Or, if you have more than one child, do not assume each one needs to attend the same college or university--or even needs to go at all. Talk openly with each child about goals and aptitudes, and what the best educational or career choices are.